Any* contract entered into on or after 1 July 2017 for the sale of land for a market value of $750,000 or more requires a vendor to obtain and provide a “Clearance Certificate” to the purchaser otherwise the purchaser must withhold 12.5% of the purchase price and pay that amount to the ATO at completion.
The new regime is designed to capture foreign residents and certain CGT obligations so generally speaking a Australian resident vendor will obtain a Clearance Certificate and no amount will be required to be withheld.
A Clearance Certificate can be applied for online and the ATO indicate a vanilla domestic resident should receive a Clearance Certificate within a few days.
The ATO has published useful information about the process. An updated Contract for the Sale of Land will be published by the NSW Law Society in due course.
The regime captures more than the “sale of land” and extends to lease premiums, options or rights to acquire property or interests in Australian entities whose majority assets consist of affected property.
Naturally additional rules to the conveyancing process will add complexities in some situations and potential delays. Vendors and purchaser should take into account these additional time frames and steps to the process and you should obtain legal advice to see if the contract is affected by the new regime.
* Subject to various exceptions and inclusions…